Yangtze River Delta Shipbuilders Floundering

China Daily

Friday, August 17, 2012

China's Ministry of Industry and Information Technology reports that orders in first half 2012 are down by 50.3% year-on-year.

The volume of handling orders was a mere 125.87 million DWT by the end of June, down 30.7 percent year-on-year, which can easily lead to the assumption that some shipbuilders will not be able to keep operating in the following months.

"We have not received any new orders. If the situation continues, we will have only one ship to build in the second half of this year," says Pan Haiwei, general manager of Wu Zhou Shipbuilding Industry Co Ltd in central Zhejiang.

Shipbuilders in neighboring Jiangsu province are also barely staying afloat.

Zhang Yuyong, executive deputy general manager of New Century Shipbuilding Corp in central Jiangsu, says the company had also not received any orders by August. "The orders we are handling now will be completed by April or May next year. But my prediction is that the shipbuilding market will not pick up until 2015," Zhang says.

"Meanwhile, the profits of shipbuilding are much reduced. An 80,000-ton bulk carrier, for example, was priced at $34 million (28 million euros) in 2010, but the price now is merely $23 million. That 30-percent profit is almost gone now," he says. "Of course there are shipbuilders fighting for orders. But the profits are so small that it is like chewing bones for us. Some private shipbuilding companies that have found trouble keeping their cash flow healthy definitely desire new orders. But for us, we can make it even if we are out of any new orders."

"For the low-end shipbuilding companies, the historic low in the shipping market will pose much threat to them. But for companies specializing in high-end ocean engineering, the lull means nothing," he says.